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"The findings are especially powerful when we work with participating firms to understand their unique situations as they plan and prepare for the opportunities and challenges that come with the next stages of growth and success."

The median firm AUM has grown to $593 million in 2016 from $358 million
in 2012, a 10.0% five-year compound annual growth rate. In addition,
profitability remains strong with standard operating margins of 25% in
2016.

“Independent advisors are continuing to succeed for two important
reasons,” said Jonathan Beatty, senior vice president, sales and
relationship management, Schwab Advisor Services. “First, high-net-worth
individuals with the most complex financial needs are increasingly
seeking the independent model and secondly, within firms of all sizes,
advisors are making the right strategic decisions to help them retain
their valued clients, win the trust of new clients, and expand and scale
their businesses.”

Focus on new-to-firm assets bears fruit

Across the board, advisors have identified client acquisition via
referrals as a top strategic priority and as a result, growth continues
to be driven by client referrals and referrals from centers of influence
(COI):

At the fastest-growing firms, existing client referrals and COI
referrals drove 5.8% of new asset growth, and for all other firms,
referrals collectively drove 2.7% of new asset growth.

The fastest-growing firms not only excel at winning new assets through
these referral sources, they also emphasize new client acquisition with
a range of additional marketing activities such as networking, community
involvement, website presence, seminars, and events.

These marketing strategies helped drive an additional 3.6% of new asset
growth at the fastest-growing firms, translating into more new clients
and more new-to-firm assets.

A median of 31 new clients in 2016 for the fastest-growing firms, more
than 1.5 times as many as all other firms.

A median of $45 million in AUM from new clients for fastest-growing
firms, compared with $23 million at all other firms.

Investors align with the independent model

Client relationship size grew as advisors increased assets from new
clients in 2016 and investment performance was strong.

At the median, average client relationship size grew to $1.8 million
in 2016, up from $1.6 million in 2015.

The largest firms generally work with larger clients. Firms with over
$2.5 billion in AUM had an average client size of more than $3
million, while firms with $100 million to $250 million in AUM had an
average relationship size of $1 million.

Firm growth and success is an individual firm endeavor

The Benchmarking Study underscores that firm success is tied to growing
intelligently by making firm-specific strategic decisions.

“Schwab’s Benchmarking Study shows what success looks like at various
firm sizes and stages,” said Beatty. “The findings are especially
powerful when we work with participating firms to understand their
unique situations as they plan and prepare for the opportunities and
challenges that come with the next stages of growth and success.”

Schwab’s annual RIA Benchmarking Study provides participating advisors
with insights on key performance indicators relative to their peers,
allowing them to analyze their firms, compare their firms with other
similar firms, and plan strategically for growth. The study also
generates broad industry insights that enable advisors to observe trends
and best practices in the RIA landscape.

The 2017 study provides information on such topics as asset and revenue
growth, sources of new clients, products and pricing, staffing,
compensation, marketing, technology, and financial performance. Fielded
from January to March 2017, it contains self-reported data from 1,321
firms that custody their assets with Schwab Advisor Services and
represent over three-quarters of a trillion dollars in AUM. Since the
inception of the study in 2006, more than 3,300 firms have participated,
with many repeat participants.

Data represents median results for firms with $250 million or more in
AUM unless otherwise noted. The fastest-growing firms are the top 20% of
firms as determined by net organic growth (5-year net organic compound
annual growth rate). This cohort includes 135 firms out of 675, all of
which have $250 million or more in AUM. Net organic growth is the change
in assets from existing clients, new clients, and assets lost to client
attrition before investment performance is taken into account, and it
excludes the growth from acquisitions, divestitures, and advisors
joining or leaving a firm with assets.

About Charles Schwab

At Charles Schwab we believe in the power of investing to help
individuals create a better tomorrow. We have a history of challenging
the status quo in our industry, innovating in ways that benefit
investors and the advisors and employers who serve them, and championing
our clients’ goals with passion and integrity. More information is
available at www.aboutschwab.com.
Follow us on Twitter,
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and LinkedIn.

Schwab Advisor Services™ serves independent investment advisors and
includes the custody, trading, and support of Schwab.

Independent investment advisors and Schwab are independent of each other
and are not affiliated with, sponsored by, endorsed by, or supervised by
each other. For informational purposes only.

(0717-7ZUT)

1 Data represents median results for firms with $250 million
or more in AUM unless otherwise noted. Results are from the 2017 RIA
Benchmarking Study from Charles Schwab, fielded January to March 2017.2
Data represents median results for firms with $250 million or more in
AUM unless otherwise noted. Results for 2015 are from the 2016 RIA
Benchmarking Study from Charles Schwab, fielded January to March 2016.3
Fastest-growing firms are the top 20% of firms with $250 million or more
in AUM based on five-year net organic compound annual growth rate.